Avgas price too good to be true

[Ted]

You guys got me thinking last night, which is a dangerous thing for me to do. It's 6 hours flying time, plus a fuel stop, no way to go non-stop, so even a quick turn adds at least an hour for descent, landing, taxi, takeoff and climb back to altitude. It's seven and a half hours and 750-800 gallons of fuel. But, I am still thinking about it.

Door to door, it would probably still be faster and way more fun than commercial (for you ). But it would also be way more expensive without a doubt.

We're in the boat of if we can't fly ourselves, we just won't go. But that's because flying ourselves is part of the fun, and I have a strong hatred for the TSA. Plus with a small baby, commercial would be far more difficult.

 

[danhagan]

I fly near that area pretty often to visit my brother. Hope that deal holds out ... that'd make for a VERY low cost return trip.

 

[Tony_Scarpelli]

I have a strong hatred for the TSA.

Yeap, me too.

 

[Z06_Mir]

I wonder if all of the FBOs, flight schools, repair shops, avionics shops, aircraft sales, DPAs, and everyone else who earn their living from the GA industry, if they all contributed into paying down the cost of avegas in order to get more people into the air, if they would not all end up making considerably more money as a result?

What if avegas was $1.00 per gallon everywhere, or better yet, fifty cents, all of the time? How much of a jump start do you think that would give GA? Heck, The FAA should be contributing as well, look at all the FAA jobs that GA provides to them, getting to regulate it and all.

All of those folks earning their living off of GA could simply look at the added expense as part of the cost of doing business, like rent, or utilities.

However, I have a hunch that such a plan would run contrary to the FAA overall long term goal of eliminating GA altogether in order to clear the skies for government drones.

-John

That's unfortunately not possible John. Where I worked we paid about $4/gal for 100LL and marked it up to 6. We still lost money on it.

 

[livitup]

You guys got me thinking last night, which is a dangerous thing for me to do. It's 6 hours flying time, plus a fuel stop, no way to go non-stop, so even a quick turn adds at least an hour for descent, landing, taxi, takeoff and climb back to altitude. It's seven and a half hours and 750-800 gallons of fuel. But, I am still thinking about it.

Time to upgrade to a 442?

 

[N747JB]

Time to upgrade to a 442?

I hope you mean a Cessna 441, not an Oldsmobile 442!! But, a 441 dash -10 would make it nonstop with light fall winds. Hummmmmm???

 

[Ted]

I hope you mean a Cessna 441, not an Oldsmobile 442!! But, a 441 dash -10 would make it nonstop with light fall winds. Hummmmmm???

John, you just bought the 425. Don't you have to hold on to it for at least a year before you sell it? Or were the avionics upgrades enough work to put into it to allow a sale?

 

[N747JB]

John, you just bought the 425. Don't you have to hold on to it for at least a year before you sell it? Or were the avionics upgrades enough work to put into it to allow a sale?

I'm not selling it any time soon, I haven't even gotten the N number changed yet! It's working real well for what I'm doing right now, I don't go out west any more on a regular basis, like I did when I had the 441 and the 551.

 

[Ted]

I'm not selling it any time soon, I haven't even gotten the N number changed yet! It's working real well for what I'm doing right now, I don't go out west any more on a regular basis, like I did when I had the 441 and the 551.

Makes sense. The 441 is really a long distance machine.

I looked up your 421 - the new owner sure likes flying around thunderstorms!

 

[N747JB]

Makes sense. The 441 is really a long distance machine.

I looked up your 421 - the new owner sure likes flying around thunderstorms!

My buddy and joke that those guys never fly in good weather!! I think last week they flew without dodging storms!

 

[livitup]

I hope you mean a Cessna 441, not an Oldsmobile 442!! But, a 441 dash -10 would make it nonstop with light fall winds. Hummmmmm???

Of course I did, and I blame my mistake on a simple iPad typo, and not due to an overwhelming ignorance of model numbers of planes stratospherically out of my grasp.

 

[ChrisK]

Of course I did, and I blame my mistake on a simple iPad typo, and not due to an overwhelming ignorance of model numbers of planes stratospherically out of my grasp.

I constantly tell people at the airport I know nothing about cars or planes...

 

[Ted]

My buddy and joke that those guys never fly in good weather!! I think last week they flew without dodging storms!

All about luck for sure. I haven't had to use the radar at all this summer, nor the stormscope. Used it a couple times for fun, but would've been fine without it.

 

[TangoWhiskey]

Anybody here going for cheap fuel today?

Might be fun to listen in! Probably going to be nuts there today.

http://www.liveatc.net/search/?icao=KHYI

 

[TangoWhiskey]

IFR conditions this morning may limit activity.

http://flightaware.com/resources/airport/KHYI/weather

 

[jonnyjetprop]

Plus you'll need the room to bring home all the stuff your wife buys with the winnings :wink2:

You guys got me thinking last night, which is a dangerous thing for me to do. It's 6 hours flying time, plus a fuel stop, no way to go non-stop, so even a quick turn adds at least an hour for descent, landing, taxi, takeoff and climb back to altitude. It's seven and a half hours and 750-800 gallons of fuel. But, I am still thinking about it.

 

[kenjr]

I wasn't flying when it all switched over to 100LL but whenever it was, gas was cheap...like really $1 gallon cheap (or less). It blows me away that my plane is rated for 80/87 which if it was available would probably be almost $2/gal cheaper than 100LL but you can't find it anywhere.

While I think it's possible to stimulate GA by lowering the gas prices...someone would have to subsidize it and it wouldn't be the FBO's. From what I understand most of their profit (and municipal airports as well) come from the margin on fuel.

 

[AggieMike88]

The reduced price really stands out against it's neighbors (image source: Skyvector)

 

[JimNtexas]

I scarfed up 17 gallons of sweet, sweet 100LL this evening for $17. I got there just after 7pm (tower closing time), there were 3 airplanes in the pattern and three waiting to takeoff.

I had to wait about an hour to pay for my gas because the Mac based program they were using crashed. As it died it sent text messages to everyone waiting saying that they had been 'removed from the que'.

Skyport is a really nice FBO. They have something going every weekend. I think they are kind of becoming an aviation version of a Harley-Davidson dealer. That is, a place where current and potential customers like to go and just hang out.

 

[Jim_R]

I predict they'll kill the deal within two weeks after selling massively large volumes of Avgas.

Ding ding ding! We have a winner!

http://www.avweb.com/avwebflash/news/Redbird-To-End-1-Avgas-Two-Weeks-Early220707-1.html

 

[Chip Sylverne]

So they proved their hypothesis. Avgas is price elastic.
Geniuses.

 

[Jeff K]

I don't think it was ever about "data points" or seeing if AV gas prices effects flying. Of course it does. But $1/gal proved about as much as offering the gas at a dime a gallon. If they really wanted to prove something they should have priced the AVgas at a inflation adjusted price from the golden age of General aviation... which is pretty much close to MOGAS. (about $3.50 a gallon)

All these clowns were looking for was free advertisement.... I myself recall them being specifically asked if they would end the promotion early... and they said they wouldn't. If I'm ever in the area I'll specifically avoid their FBO.

 

[Jeff K]

They have tried to hide their FAQ page, but I found a cached copy (FAQ at bottom... don't click on it... scroll to bottom):

http://webcache.googleusercontent.com/search?q=cache:http://redbirdskyport.com/flymore

Are you going to run out of gas?

No! To maintain a reliable supply for everyone and keep delays to a minimum, the fueling limit is 200 gallons per aircraft per day. Aircraft requiring more than 200 gallons may purchase that additional amount at the regular price. We won’t fuel aircraft that we believe are violating the spirit of the experiment.

Will it really last all month?

Yes, the $1 price is valid for the entire month of October during normal operating hours, 6am to 10pm.

 

[Genes]

All these clowns were looking for was free advertisement.... I myself recall them being specifically asked if they would end the promotion early... and they said they wouldn't. If I'm ever in the area I'll specifically avoid their FBO.

"free advertisement" -- That's funny. Are you trying to be funny?

A lot of people bought some cheap gas and Skyport collected a lot of data that these "clowns" will use to try to resuscitate general aviation. And you're going to avoid their FBO? How does that even make sense?

 

[DavidWhite]

I am quite cross that they ended it before I could go down there and get some.

 

[jesse]

I am quite cross that they ended it before I could go down there and get some.

A serious miscalculation on their part. There were likely a lot of people that planned on doing trips to that area and have already made various commitments with the fuel price being what made the numbers work.

You really should not say you're going to do something then not do it. That rubs people the wrong way regardless of your intentions.

I'm not sure why they didn't expect so much activity.

 

[DavidWhite]

A serious miscalculation on their part. There were likely a lot of people that planned on doing trips to that area and have already made various commitments with the fuel price being what made the numbers work.

You really should not say you're going to do something then not do it. That rubs people the wrong way regardless of your intentions.

I'm not sure why they didn't expect so much activity.

Yeah, it definitely doesn't rub me the right way.

 

[airguy]

We already got a Centurion engines brochure in the mail as a result of visiting there Friday of last week, I'm sure I'm on a couple dozen mailing lists already. It's a perfect datamining plan - you are getting a list of money-spending pilots, with descriptions of their flying habits, the planes they fly, and what they are interested in. It's a marketing wet-dream, well worth the money spent for the gimmick fuel prices.

 

[Chip Sylverne]

We already got a Centurion engines brochure in the mail as a result of visiting there Friday of last week, I'm sure I'm on a couple dozen mailing lists already. It's a perfect datamining plan - you are getting a list of money-spending pilots, with descriptions of their flying habits, the planes they fly, and what they are interested in. It's a marketing wet-dream, well worth the money spent for the gimmick fuel prices.

Except for the fact they didn't follow through on the month- long commitment. That right there will deter me from doing business with any company associated wih the promo.

It was a good idea. Now it smells bad.

 

[Jeff K]

"free advertisement" -- That's funny. Are you trying to be funny?

A lot of people bought some cheap gas and Skyport collected a lot of data that these "clowns" will use to try to resuscitate general aviation. And you're going to avoid their FBO? How does that even make sense?

Not at all trying to be funny. Dead serious. Aviation gasoline never was $1 adjusted for inflation. The only legitimate study here would have been to adjust prices to reflect prices during the so called golden age of aviation... which adjusted for inflation would be around $3.50 - $4 a gallon.

So explain to me how this useless data is going to be used to "resuscitate general aviation"? That is a serious question, and if you can explain it to me sufficiently, then I'd be happy to fall on my sword.

Yes, I'm going to avoid this FBO as I'm sure some pilots changed their plans to take advantage of this promotion (and I never thought it was a study). A good deal or not this is simply disrespectful as to many booking a trip or vacation costs money... even if canceled. Redbird was emphatic when asked if they would run out...saying NO! (see my other post).

Poster Jesse said it best:

There were likely a lot of people that planned on doing trips to that area and have already made various commitments with the fuel price being what made the numbers work.

You really should not say you're going to do something then not do it. That rubs people the wrong way regardless of your intentions.

P.S. As to me calling them "Clowns", I was being generous.

 

[mcoflyer]

Fuel about 30 miles from me at KLEE is the lowest in the country at $4.25 a gallon. If they were to run a promo at $3 per gallon with sponsors etc they would make a killing. Everyone would stop there. Their cost is probably around $3-$3.30 per gallon but if ordered in bulk they could lower it and could make some more $$$ from traffic stopping by.

 

[weirdjim]

Ding ding ding! We have a winner!

http://www.avweb.com/avwebflash/news/Redbird-To-End-1-Avgas-Two-Weeks-Early220707-1.html

The cleverer way to do it would be to say that the first XX gallons a day were $1 and your limit is YY gallons at that price. That way they could honestly have cut their losses and gotten the same good press (and good datamining opportunity).

I could see a LONG line forming at 6 am with this scenario.

Jim

 

[Jeff K]

The cleverer way to do it would be to say that the first XX gallons a day were $1 and your limit is YY gallons at that price. That way they could honestly have cut their losses and gotten the same good press (and good datamining opportunity).

They did. See the cached FAQ link I posted. It was up to 200 gallons a day at $1/gal with anything beyond that at regular price.

There was enough wiggle room in their conditions ("We won’t fuel aircraft that we believe are violating the spirit of the experiment") that they could have limited the corner cases (like the local Warbird club camping out) without shutting it down.

 

[Martymccasland]

Put me in the column of not understanding the "experiment" - and my day job is running a marketing intelligence company.

1) Take the angle of building a marketing list:

90,000 gallons, say 45 average gallons per customer = 2000 customers max -- and that's assuming no repeat customers, etc.

If their cost was $3.50, they lost $2.50 per gallon. Total cost = $225,000

$225,000 / 2000 = $112.50 per potential lead from the mailing list.

And what is this a list of? Very price-concious pilots? Not something as a marketer that would get me really excited.

But continuing down the marketing list route, I can't see marketers buying that hot list for more than than $200 or so per thousand. The whole list is $400, or let's just round it up to $500 for the whole list. They'd have to sell the list 450 times to break-even.

It's not like it's event based (pilots about to upgrade, kids just going to college / likely to travel more, etc..) -- and the plane owner list is public domain in several (all?) states. So I personally don't see the high-value / unique nature of the list that would make hundreds of companies lining up to buy the list.

2) Take the "free advertising" route:

AvGas is a commodity. 90% or more of the demand curve of a commodity is price -- otherwise it wouldn't be a "commodity". Maybe they are trying to make an impression with service, facilities, etc. in hopes of poaching longer-term clients. However, boost that price a few quarters over the next local competitor with 80% less overhead, and all but the least price-concious pilots are going somewhere else.... And if they were low-price-concious pilots, they probably weren't stopping by during the promotion to begin with.

Unless I'm parking in a bigger city like Chicago with close access to mass transit, heated hangers in winter, etc., I am shopping primarily on price. 'Can't imagine any others greatly altering their flight plans to include this place for any reason longer term than lower price...

Now JetA buyers don't seem to be as price-conscious and will park places with nice PAX amenities, etc.. i.e. The non-commodity elements such as service, etc. are more valuable to these buyers... But JetA was not part of this "experiment".

Add in not keeping their word to the marketplace (ending their promise early), and I can't see this ever being the true angle. If it was, they arguably did more damage than good by not keeping their word.

3) Take the "research project" angle:

You don't need to spend a quarter million to figure out something obvious -- unless you're the govt. Will selling gas -- a commodity -- 80% below market price stimulate demand? I'd worry about the business acumen of anyone who has such a question / doubly so if they want to spend a quarter million to find the answer. So I don't buy that a "research project" was ever the goal.


So what am I missing? I don't think these people are crazy since money is money -- and it has a way of economically killing off people doing stupid things without a return.

So what is the return / the true return of this promotion?

 

[weirdjim]

They did. See the cached FAQ link I posted. It was up to 200 gallons a day at $1/gal with anything beyond that at regular price.

You didn't read what I wrote. I said some limit, say 500 gallons a day with everybody limited to 20 gallons. That gives 25 pilots the opportunity to take advantage ... and if that isn't enough to fuel the experiment, then up the day limit or up the individual limit.

Jim

 

[weirdjim]

my day job is running a marketing intelligence company.

Isn't that an oxymoron like giant shrimp or government thrift?

 

[Jeff K]

I'm with you on #1 and #3, but lets look at #2 a bit. Free advertising.

Type in "redbird skyport" gas in google.. you get 11,500 hits.

That's alot of press in anyone's book.

You argued in your close of point #2 you didn't think advertising was their angle since they ended the promotion early. You closed your missive suggesting they weren't stupid but still asked what their angle was.

I've found that Halon's razor, that is "Never attribute to malice that which is adequately explained by stupidity" explains alot of things in life.

The answer you seek may be as simple as that.

Put me in the column of not understanding the "experiment" - and my day job is running a marketing intelligence company.
...

2) Take the "free advertising" route:

AvGas is a commodity. 90% or more of the demand curve of a commodity is price -- otherwise it wouldn't be a "commodity". Maybe they are trying to make an impression with service, facilities, etc. in hopes of poaching longer-term clients. However, boost that price a few quarters over the next local competitor with 80% less overhead, and all but the least price-concious pilots are going somewhere else.... And if they were low-price-concious pilots, they probably weren't stopping by during the promotion to begin with.

Unless I'm parking in a bigger city like Chicago with close access to mass transit, heated hangers in winter, etc., I am shopping primarily on price. 'Can't imagine any others greatly altering their flight plans to include this place for any reason longer term than lower price...

Now JetA buyers don't seem to be as price-conscious and will park places with nice PAX amenities, etc.. i.e. The non-commodity elements such as service, etc. are more valuable to these buyers... But JetA was not part of this "experiment".

Add in not keeping their word to the marketplace (ending their promise early), and I can't see this ever being the true angle. If it was, they arguably did more damage than good by not keeping their word.

....


So what am I missing? I don't think these people are crazy since money is money -- and it has a way of economically killing off people doing stupid things without a return.

So what is the return / the true return of this promotion?

 

[Martymccasland]

Isn't that an oxymoron like giant shrimp or government thrift?

It keeps the checks coming, wife and kids happy, and the prop spinning...:wink2:

 

[Martymccasland]

Maybe so. I've worked with a few organizations where the true entrepreneurs either handed it down to their kids, or cashed-in the options and went somewhere else. The new people at the helm start trying wild stuff since they didn't squeeze nickels in the early day to have a profit -- and the business is little more than a magic grinder that spits out money. Now that profit is easy come, it tends to "easy go" due to not really understanding what created the profit to begin with.

Could be some of that at work here.... Could be some master-stroke that's just not obvious. I tend to think not since we're talking about running deep specials on commodities. Apple doing something with a high margin item is one thing; slashing the price of something you don't even make AND anyone can buy nearly anywhere else is quite another.

Your Halon's razor has a right feel to it. Maybe time will tell what they were thinking and if it paid off.

I'm with you on #1 and #3, but lets look at #2 a bit. Free advertising.

Type in "redbird skyport" gas in google.. you get 11,500 hits.

That's alot of press in anyone's book.

You argued in your close of point #2 you didn't think advertising was their angle since they ended the promotion early. You closed your missive suggesting they weren't stupid but still asked what their angle was.

I've found that Halon's razor, that is "Never attribute to malice that which is adequately explained by stupidity" explains alot of things in life.

The answer you seek may be as simple as that.

 

[Jeff K]

You didn't read what I wrote.

You mean what you first said?

The cleverer way to do it would be to say that the first XX gallons a day were $1 and your limit is YY gallons at that price.

Vs. what Redbird said:

the fueling limit is 200 gallons per aircraft per day. Aircraft requiring more than 200 gallons may purchase that additional amount at the regular price.

Vs. what you are now saying:

I said some limit, say 500 gallons a day with everybody limited to 20 gallons.

To me you first statement looks alot closer to what Redbird was saying then your later statement. But I accept that's not what you meant based on your theory of the experiment.

That gives 25 pilots the opportunity to take advantage ... and if that isn't enough to fuel the experiment, then up the day limit or up the individual limit.

You don't change the experiment to get the desired results. Doesn't matter anyways as the whole "experiment" was flawed since there was no control group to compare it to. Even if Redbird sold 10X the fuel in this 2 weeks, without knowing if the total flowage went up or down at other FBO's it proves very little other then people will shift who they buy from based on price. Yet the purported goal of the experiment was to see if flying went up. That would require knowing the total flowage over the experiment area... not just one FBO selling at $1/gal.

If they truly wanted to do this experiment properly, they'ed do it regionally (multiple FBO's), price the fuel based on the presumption recent price increases are the factor (i.e. ~$3.50/gal pricing not $1), and have control groups. I'd say pick 4 FBO's in a region, each one alternately sells $3.50/gal AVGAS on a 3 month cycle (2 months normal, one month discounted). Monitor the N numbers/flowage at each for a period before the experiment and after to get a good control group. It also might be advisable to monitor flowage at surrounding non-participating FBO's.... at least far enough away tankering wouldn't be economically feasible.

That experiment might actually begin to produce usable data. Even then, I'd have to question the goal... since it is proving something not achievable since we don't have $1 or $3.50 gallon 100LL. And experiment has to map back to something achievable otherwise it's an academic exercise.

One worthy experiment in my eyes would be to map pricing to the price of premium mogas.... lets say $4 a gallon. That's at least tangible in the sense the government going out of business would both relieve us from FAA oversight as well as stop the ethanol subsidies. MBTE is my friend.